Friday, 19 October 2012

With His Welfare Explosion, Is Obama Buying the Election?

Sign up before Midnight to watch our video,“Biggest Ponzi Scheme in U.S. History to Crash,”
and get our daily e-letter Investment Contrarians.

We respect your privacy!
We will never rent/sell your e-mail address.
That’s a promise! And you can opt out at any time.

With
the unprecedented budget explosion of means-tested, welfare-related
entitlements, does Team Obama think it can buy the election?

It's a cynical question. But I wouldn't put it past that cynical bunch.

Remember Harry Hopkins, Franklin Roosevelt's close aid? It was
Hopkins who argued tax and tax, spend and spend, elect and elect. Sound
familiar? And if I'm not mistaken, the high-tax, anti-rich,
big-spending, redistributionist FDR is one of Barack Obama's idols.

So let's take a look at some of the recent budget-explosion data points:

According
to Jeff Sessions, the ranking Republican on the Senate Budget
Committee, means-tested welfare programs soared to over $1 trillion last
year. The federal government accounted for $750 billion of that, while
$250 billion came from the states, which leveraged federal payments into
even larger expenses.

Between 2008 and 2011, federal welfare
payments have jumped 32 percent. Food stamps have surged, with 71
percent more spending on the program in 2011 compared with 2008. Health
payments, principally Medicaid, have climbed 37 percent.

By the
way, it's not just the deep recession and weak recovery that's driving
up these programs. It's a substantial eligibility expansion, which
started under George W. Bush, but has gone much further under President
Obama.

In a larger budget context, reporter Jeffrey H. Anderson
uses a Treasury Department study to chronicle the 7-Eleven presidency.
In fiscal year 2012, ending September 30, the government spent nearly
$11 for every $7 of revenues taken in. The exact figures are $2.5
trillion in tax revenues and $3.5 trillion in spending. In other words,
it spent 44 percent more than it had coming in. Previous fiscal years
look even worse: The government spent 56 percent more than revenues in
fiscal year 2011 and 60 percent more in fiscal year 2010.

All in
all, according to Mr. Anderson, the government under the Obama
administration received $6.8 trillion in taxes and spent $10.7 trillion
-- 56 percent more than it had available.

What's going on here is fiscal profligacy on the grandest scale in American history. And there are consequences.

Massive
amounts of capital are being drained from the private sector and
transferred to the government. This is one reason why American
businesses have gone on a virtual capital-investment strike. Small
businesses, in particular, can't get the capital being drained by Uncle
Sam.

After four years of trillion-dollar deficits, both businesses
and individuals have held back investment because they fear massive tax
increases are on the way. That's a big reason why the so-called
recovery has been so weak.

In addition, in our new entitlement
nation, growing government dependency is ruining the very moral fiber
and backbone of America's traditional work ethic. Increasingly, the feds
are paying more to not work, rather than providing after-tax incentives
to go back to work.

Mitt Romney has taken a lot of flak for
raising the issue of growing government dependency. But however
inartfully he may have expressed his view, his basic story is correct.
The sheer volume of spending going on in this country is bringing us
ever closer to bankruptcy.

And consider this: The spending
explosion for means-tested welfare programs is outpacing spending on
Social Security and Medicare, which are themselves veering toward
bankruptcy.

I may be too cynical about Obama trying to buy the
election with this entitlement explosion. Perhaps. But Mr. Obama wants
to raise taxes in order to spend more on government unions and
entitlement programs. It is redistribution, but it could be vote-buying,
too.